Bought a New Car? Here’s How It Can Help You Reduce Your Income Tax

The majority of individuals are not aware of the advantages of paying taxes following the law.

A 1% TCS is charged on vehicles costing more than Rs 10 lakh.

But if you familiarize yourself with tax laws, you can get that back.

In this article, we’ll go over how to get back the 1% TCS you paid when you bought your new automobile. Understanding the nuances of tax legislation is essential to avoid paying large sums of money in taxes. Here, it must be made clear that we are neither discussing nor endorsing tax avoidance. Instead, we want to inform our readers about how they can take advantage of the tax benefits that are outlined in the laws themselves.

1% TCS on New Car Purchase

Tax Collected at Source is referred to as TCS. It is a fee that the seller assesses to the buyer based on the price of the goods being purchased and sold. If the entire cost of the vehicle exceeds Rs 10 lakh, a 1% TCS must be paid by the buyer of the vehicle to the seller of the vehicle. Since 2016, this has been the rule. The other popular goods that are subject to this tax are jewelry, bullion, tendu leaves, etc. Depending on the authorities’ cap, each of these draws a different percentage of TCS.

The seller will give the buyer the TCS certificate after paying the TCS fee for the new car purchase to the dealership as part of the automobile’s price. It serves as the TCS certificate, Form 27D. It will include information such as the names of the buyer and seller, the seller’s TAN, the buyer’s PAN, the tax the seller collected, the date the tax was collected, and the tax rate (1% in the case of automobiles). Look for the TCS schedule on the tax return form while filing an ITR.

The car buyer’s TCS payment is included on his 26AS statement. The money is finally credited against the car buyer’s PAN if there is no tax owed by him or her.

The information from Form 27D will be used to automatically fill in the details. Cross-check the information to make sure it is accurate and make any necessary edits. If you have no tax responsibilities, the TCS amount will be returned to you; otherwise, it will be applied to any unpaid taxes you have. Be aware that this sum cannot be carried over to the following year. Therefore, you must mention it in the same year that you buy the car. We hope that this information on the TCS for buying a new automobile will be helpful to you.